BMW and Daimler pledge to keep prices high when chip crisis ends

That’s what I am saying, that they’re not undercutting them they’re actually rising to their level & trying to be a legitimate competitor to them.

They’re no longer just relying on cheaper cars at cheaper prices but actually building quality products with competitive prices.

We’re not disagreeing, ‘out-doing’ versus ‘undercutting’, I spose.

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Healthy debate is always fun…

Spider-Man Reaction GIF

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It would be argued it’s not ‘chips’ but boards. Then not boards but full assemblies. Supplier B cannot ship that Inverter assembly because the boards are incomplete (chips), so on and on. I think Toyoda actually stockpiled assemblies (by months in some cases) and boards, and weren’t truly JIT, but were indeed eventually bitten like everyone else.

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I call bs on this. Everything is governed by the law of supply and demand. If BMW and MB don’t want to supply the demand, someone will step in to bridge that gap. BMW and Mercedes best sellers are the 3 series and C-class. The competition in that segment is fierce.

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While I am certainly no expert in this category it is partially a JIT thing. While that one part may not have a high holding cost, apply that to the whole supply chain / parts manifest across several brands under the same umbrella and several continents of manufacturing then all of a sudden profit margins increase by not warehousing everything.

When a company’s primary obligation is to the shareholder as it has been for quite a while and the massive overhead that car manufacturers face, it makes sense that most have adopted some form of JIT coupled with a little bit of “Lean” manufacturing and of course the Six Sigma group has to add their twist to it. It didn’t help when some manufacturers went bankrupt and the emphasis is to improve margins was more of a necessity than ever before. It works great, till it doesn’t, like now.

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Maybe it’s an opportunity for other brands to start selling in US.

One thing that will be interesting to watch is what’s going to happen to all the real-estate that won’t be in use because now you need a smaller parking lot.

GM does pretty well in China from my understanding, given their market share and sales volume there.

Agreed with @ApexHunt. Let’s not forget that the margin for car manufacturing historically has been low. The only way to improve margin was through cost cutting, which meant JIT and economies of scale.

BMW and Mercedes can reach their aspiration only if they can maintain their pricing power. Given the fierce competition in the luxury car market, I don’t see them having a clear path to success. We have no shortage of aspirational electric luxury car makers to start with…

I am very curious how this will unfold.

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I agree with some other’s. I think these companies are pumping out the articles to get consumers to buy now because they’re saying “things won’t get better”. I think when supply becomes closer to normal, they will have to become competitive again - or lose market. No way am I buying BMW at the current prices. And I just had one come off lease that I’m not replacing as prices are too high - when the second one is up in July, we’ll see what the future looks like. I bought a 15 year old Saab as a daily to replace my BMW - I actually prefer driving the Saab funny enough - there are very few features that I miss and the Saab drives better than the X2 did.

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They may not want his, but they’re having no issues finding people willing to throw money to drive their cars, at least in the Midwest. They’re selling for close to sticker, and still selling them off the truck.

I think a lot of people on this site think that unless they get a BMW at 10 or more percent off at buy rate, it’s not worth it. While it might not be worth it to you, I can assure you, there are thousands of people who will pay.

Time will tell if they can sustain this model moving forward. It’s a bit premature to think they can’t though, at the moment anyways. Just because the people on this site feel that BMW and Mercedes needs to drop their pants to get sales, doesn’t mean the general buying public does.

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I think you’ll see places selling multiple flags consolidate space and sell off the excess buildings and land. Those mom and pop shops selling one thing will get sucked up by a conglomerate more and more which will further the consolidation process.

Isn’t this true normally too? Most people pay at or near sticker and that helps subsidize the deals that more savvy shoppers are able to achieve (i.e. the 10% off at buyrate)

To a degree, yes. I think there’s a huge misconception here though that auto sales require huge discounts in order to sell a car, and that these discounts are entitlements to all car shoppers. While that may have been true in the past to some degree, it wasn’t true on every car at every dealership. That’s even more the case today and will be for at least another year +. This isn’t ending anytime soon, and likely will never be the case where there are overflow lots brimming with unsold cars ever again.

To each their own )

Are you talking right now or pre-pandemic?

There is history of them dropping their pants to get sales pre-pandemic.

Both

Here, and some of the fanboy sites, yeah. In the real world where people walk in off the street, not so much

So why were they so entrenched in a price war to sell units & dropping prices before?

Are there people who just walk into a dealership & pay sticker & don’t care about the rebates or whatever manufacturer is offering?

sure there are. But you can’t tell me that manufacturers just happen to have incentives cuz they don’t work or to just have that “frugal” car buyer buy their lowest trim with biggest discount. If that were the case they wouldn’t have been throwing $$ around just for the hell of it.

Wonder what this’ll do to the beloved 1% rule :stuck_out_tongue:

Good for them, that vacuum is exactly what Kia (and others) needs to fill the market with new, smart, sexy, fast electric cars.

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Rolex ADs can’t sell for over retail. Those prices you see are from second party sellers.

Plenty of third party banks and credit unions for financing. Probably more 84 months financing if no lease programs are available.

Look at Porsche. Not the #1 volume manufacturer but they make more money than any other single brand. Quality over quantity. I don’t see how normal brands will survive without pumping up volume or drastically raising pricing. Which in turn only props up the higher tier manufacturers because for only a little more, you can get a luxury brand.

The average buyer visits 1.6 dealers before making a purchase (I have seen a few other studies that up to 2.7). Many people already know what they want. The average person considering a 3 series is most likely not going to cross shop a C-class, Genesis, and an A4.

When I worked for BMW pre-pandemic, we never went more than $1000 below invoice (maybe 7-8% off) and that was really only for a 3 series or X1. Anything else you were shown the door if it wasn’t at least $500 above invoice.

On the dealer side, there are usually bonuses tied to different volume amounts. Selling a few loser deals might make the store tens of thousands in bonuses. That is assuming the dealer wants to chase after that moving target. Others are content to make money where they can and let the chips fall where they may.

Some people see the value of cars at their price and/or have more money than they know what to do with and don’t want to negotiate. If I am some big hedge fund manager, then spending an hour negotiating is not worth the return, either for business or personal reasons. Also, most people want the “feel good” discount. Show them a little love and they are happy. That is how we did everything at BMW. A total savings line showing $5000 off MSRP for a 5 series, which was mostly all rebates from BMW. Mr. hedge fund manager is happy because he doesn’t need to negotiate to save money and we are happy since it isn’t a loser deal.

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